Compliance with the UK Corporate Governance Code

The principle underlying the UK Corporate Governance Code is “comply or explain”, and the listing rules of the London Stock Exchange place a continuing obligation on listed companies to make a statement in their report and accounts regarding compliance with the Code, and to give reasons for any areas of non-compliance.

The board

The board comprises the non-executive chairman, the CEO, the group finance director and three further non-executive directors. It is chaired by the chairman, T H F Kirby. This arrangement does not comply with provision A.3.1 of the Code as T H F Kirby does not meet the independence criteria set out in the Code as he was formerly the Company’s acting CEO. With effect from the 2017 AGM, T H F Kirby intends to retire from the board and N J Donaldson will take on the role of non-executive chairman.

to be available to shareholders if they have concerns which contact through the normal channels of the chairman, the CEO or the group finance director has failed to resolve, or for which such contact is not appropriate

to ensure that the performance evaluation of the chairman is conducted effectively

The four non-executive directors have a breadth of successful commercial and professional experience and are considered by the board to be independent of the Group (excluding the current chairman). The Code states that the board should identify each non-executive director it considers to be independent, and the Code then lists various circumstances which may appear relevant to its determination. This includes (amongst others) if the non-executive director has served on the board for more than nine years.

At Games Workshop the board has had to confront one of these circumstances as two of the non-executive directors, C J Myatt and N J Donaldson, have served for more than nine years.

In making this assessment as to independence, the board has taken into account the personal attributes of each director in relation to the current and future needs of the board. In the opinion of the board, independence (like judgement and wisdom) is not an attribute which can be measured by reference to a checklist. It is rather an attribute which the members of the board can observe being demonstrated by a director in his actions and interactions with other members of the board as it faces the various issues which are placed before it. Independence is the absence of complacency, lazy thinking and acceptance of the status quo.

Regarding the specific Code circumstance of service of over nine years, the board’s position is as follows:

The ‘nine year rule’ is a helpful guide to the risk of directors becoming ‘stale’. The board considers this risk periodically, but has not yet found it to be an issue at Games Workshop. If it did, it would react accordingly. At present the board feels that the requirement for members of the board to have a real understanding of, and empathy with, the Games Workshop Hobby to be a point in favour of retaining the experience which the board currently has.

Conclusion

Based upon its assessment, which focusses on each director’s attitude towards making his best contribution to the progress of the Company, the board considers that both of these non-executive directors are independent. With the exception of provision of A.3.1, the Company has complied with all of the provisions set out in section 1 of the Code.